TECHNOPRENEURSHIP

1 0 1 : R A I S I N G C A P I TA L
GROUP 9
(GUBANTES, LLANOS, REQUINA, MASANCAY, VIOLA)
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CONTENTS
o What is Capital Raising
o Types of Capital Raising
o How to Raise Capital for Your Business
o Why do Companies Raise Capital?
o Who Does the Capital Come From?
o Ways of Capital Raise for Different Business Sizes
o How To Get Ready for the Capital Raising Process?
 C A P I TA L R A I S I N G
Capital raising is a process a company initiates and goes through to raise
money from outside resources to develop, transform, or expand a business in
some way.
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T Y P E S O F C A P I TA L
RAISING
Debt Raising
- involves raising funds through loans provided by third parties and are repayable on a fixed
schedule with interest.
- Forms of debt:
 Secured debt - Where collateral is used to secure the loan, thus enabling the company to avail of lower
interest rates
 Unsecured debt - This form of debt includes no borrower collateral, so the interest rate depends on the
company’s credit history
 Tax-exempt corporate debt - Some debt may be eligible for tax exemption. For example, projects
related to sustainability
 Convertible debt - Usually considered a hybrid (i.e. a mixture of debt and equity), whereby the debt
can be converted into equity if the borrower prefers.
Pros:
 Lender has no control over a business.
 Relatively fast access to cash for companies
that require it;
 In low interest rate environments, debt offers
a cheap way to access liquidity;
 Debt repayments (in interest) can be
forecasted accurately for budgeting purposes;
 The interest paid is tax deductible
Cons:
 Generally, raising debt reduces a company’s
credit rating;
 There mere availability of debt may induce
managers to raise it when it is not required;
 The money has to be repaid, even if the
business isn’t performing well;
 Debt on a balance sheet reduces
management’s strategic options.
 T Y P E S O F C A P I TA L
RAISING
Equity Raising
- occurs when a company seeks to raise funds through the sale of its equity - i.e. a share in the
ownership of the company.

Equity Raising Examples

 Seed financing
 Angel financing
 Venture Capital
 Private Equity
 Public Capital Markets
 Crowdfunding
Pros:
 Access to the management advice of seasoned  Company management is giving up (some)
equity investors;
 No obligation to pay dividends on equity
 Technically, a lower risk solution than debt
raising.
 Improves financial health of business by
reducing leverage
 Equity financing does not increase a
company’s financial obligations. 
Cons:
controlling the business;
 The equity may come with some provisions
on consulting the investors on big decisions;
 The presence of external investors may lead
to friction within the company;
 Aside from ownership, you’d have to share
the profits with the investors.
 H O W T O R A I S E C A P I TA L
FOR YOUR BUSINESS
- Ensure that the executive - Have a strong
summary of your business business plan
plan and financial statements that shows
are as good as they can be. exactly why you
That means paying off credit need to raise
card debt so that it’s not on capital, and why
the balance sheet, becoming the lender can
Step 1 Step 2 in the short Step 3
more aggressive Step 4be sure that
Clean up term about
Write credit
a terms so Emphasize Make a they’ll receive
your that your receivables are
business the sources long -listthe principal
financials lower, plan
and maybe even and uses with interest
cutting back on some within an agreed
operating expenses. timeframe.
 H O W T O R A I S E C A P I TA L
FOR YOUR BUSINESS
- As part of the business plan, - When looking to raise
know exactly where the funds capital, it’s useful to keep in
will be used. If you’re mind that you’re not the
acquiring a new piece of only one. Everybody wants
equipment, make it explicit. If more money. People who
you’re hiring for sales and are providing it are typically
marketing, show how the overrun with requests for
Step 1 Step
funds will be 2 used (what Step 3 Step 4 Step 4 The capital raising
capital.
Clean up percentage
Write ona social media, Emphasize
Make a process
Make a can take a significant
your what percentage
business on a sales the sourceslong -list amount
long -list of time.
financials team, plan
etc.). Show as much and uses
detail as possible - this also
serves to give you insight into
your own business.
W H Y D O C O M PA N I E S
R A I S E C A P I TA L ?
(IMPLICIT MOTIVE)

Growth is, for all intent and purposes, the major

reason why companies raise capital.
 WHY DO
C O M PA N I E
S RAISE
C A P I TA L ?
(EXPLICIT MOTIVES)
 W H O D O E S T H E C A P I TA L
COME FROM?
Banks
Banks remain one of the
most common sources of
capital for companies,
particularly when a
company has a good track
record with the bank.
Equity raises can also occur
with banks but tend to be
far less common.
Private debt
that is, debt-funded by
non-public financial
institutions - has seen huge
growth over the past
decade, with the caveat for
businesses that interest
rates on loans usually
begin at the 6-7% mark.
Private Equity
With private equity
companies sitting on an
estimated $2 trillion of 
‘’dry powder’ (funds
waiting to be used), private
equity currently offers an
excellent way for
companies of all sizes to
raise equity capital.
 W H O D O E S T H E C A P I TA L
COME FROM?
Angel Investors/Seed
SBA Investors/Venture Capital Public Markets

Small Business These funds usually The main reason that

Association (SBA )loans seek an equity share of companies go public is
are a hugely popular a small, fast-growing to raise equity capital:
means for small business and can build Selling off slices of the
companies to access in a debt component. A company on a publicly
significant amounts of major advantage here is traded index to fund the
capital at very attractive the ability to tap into company’s expansion.
rates, the only drawback their network and
being the time it can expertise.
take to access funds.
 WAY S O F C A P I TA L R A I S E
FOR DIFFERENT BUSINESS
SIZES
Startups Small and medium- Large Companies
sized enterprises
 Friends and family  Initial Public Offering (IPO)
(SMEs)
 Public or private business  Private equity investors
incubators  Private equity investors (those aimed at larger
 Seed investors (those aimed at SMEs) companies)
 VC funds  Family offices  Family offices
 Wealth funds and asset
managers
 HOW TO GET READY FOR THE
C A P I TA L R A I S I N G P R O C E S S ?
To raise capital, at the very least, a company will require a  business plan or pitch deck.
The aim of these documents is to show investors that the cash flows generated by the company are
sustainable enough to ensure that it will get its money back with interest (in the case of a debt raise)
or achieve what they deem to be an attractive return on investment (in the case of an equity raise).

Offering Memorandum
- Offering memorandums are used by companies seeking to raise equity capital. It has to comply with
securities laws designated by the SEC.
- This formal document provides registered investors with a detailed overview of the company’s
financials and operations.
- This process is called venture capital due diligence. This document also invariably features a
subscription agreement that defines the terms of the investor’s participation in the company’s equity
offering.
 
THANK YOU